NEW YORK — Bank of America will reimburse clients greater than $100 million and pay $150 million in fines for “double-dipping” on overdraft charges, withholding reward bonuses on bank cards and opening accounts with out buyer consent.
Combined, it is likely one of the highest monetary penalties in years in opposition to Bank of America, which has largely spent the final 15 years making an attempt to wash up its status and market itself to the general public as a financial institution centered on monetary well being and never on overdraft charge earnings and monetary trickery.
BofA should refund $100 million to clients, pay $90 million in penalties to the Consumer Financial Protection Bureau and $60 million to the Office of the Comptroller of the Currency.
“Bank of America wrongfully withheld credit card rewards, double-dipped on fees, and opened accounts without consent,” mentioned CFPB Director Rohit Chopra, in a press release. “These practices are illegal and undermine customer trust.”
Empowered by a broad mandate from the White House, Chopra and the bureau have centered closely previously yr on the difficulty of ” junk charges ” — charges charged to Americans which might be usually seen as pointless or exploitative by banks, debt collectors, airways and live performance venues.
Banks reminiscent of BofA, JPMorgan Chase, Wells Fargo and others have been a goal for the bureau below the Biden administration.
Part of the fines and penalties come as a result of Bank of America had a coverage of charging clients $35 after the financial institution declined a transaction as a result of the client didn’t have sufficient funds of their account, the CFPB mentioned. The company decided that the financial institution double-dipped by permitting charges to be repeatedly charged for a similar transaction.
The charges usually got here when clients had routine month-to-month transactions, like a fitness center membership. If a buyer had too low of a steadiness to cowl the transaction, it could be declined and BofA would cost the client a $35 charge. The enterprise, who hasn’t been paid, usually would recharge the client’s account, leading to one other $35 non-sufficient funds charge.
The financial institution ended this follow final yr, however will nonetheless must repay clients who received charged earlier than the coverage was modified.
BofA has been chopping down on its reliance on overdraft charge income for greater than a decade, and minimize how a lot it fees clients for an overdraft to $15 final yr. Brian Moynihan, the financial institution’s CEO and chairman, mentioned in 2022 that below these new insurance policies, overdraft charge earnings was down 90% from 2021. The financial institution mentioned that it voluntarily diminished overdraft charges and eradicated all non-sufficient fund charges within the first half of final yr.
Bank of America additionally provided folks money rewards and bonus factors when signing up for a card, however the CFPB mentioned the financial institution illegally withheld promised bank card account bonuses.
The CFPB additionally discovered that, since a minimum of 2012, Bank of America staff illegally utilized for and enrolled customers in bank card accounts with out their data or authorization. It is a just like, however smaller than, a cost that was made in opposition to Wells Fargo, which paid billions in fines after it was decided that the San Francisco financial institution opened tens of millions of unauthorized financial institution accounts in an effort to meet unrealistic gross sales targets.
In 2014 the CFPB ordered Bank of America to pay $727 million for unlawful bank card practices. Last yr it was ordered to pay a $10 million civil penalty over illegal garnishments. Also in 2022, the CFPB and OCC fined Bank of America $225 million and required it to pay lots of of tens of millions of {dollars} in redress to customers for botched disbursement of state unemployment advantages on the peak of the COVID-19 pandemic.
Source: www.bostonherald.com”